Questcor Pharma First Quarter Results Miss Estimates

(RTTNews) - Biotechnology company Questcor Pharmaceuticals, Inc. (QCOR), which is being acquired by Mallinckrodt Plc. (MNK), reported Monday a profit for the first quarter that nearly doubled from last year, despite higher charges, reflecting strong double-digit sales growth amid expanded usage of blockbuster drug H.P. Acthar Gel, with rheumatology being the largest growth contributor. However, both adjusted earnings per share and quarterly revenues missed analysts' expectations.

In early April, Questcor agreed to be acquired by specialty pharmaceuticals company Mallinckrodt in a cash and stock deal valued at for about $5.6 billion. The deal, unanimously approved by the Boards of Directors of both companies, is expected to close in the third calendar quarter of 2014.

The deal is expected to be immediately add to Mallinckrodt's adjusted earnings per share in fiscal year 2014 and is estimated to be significantly accretive in fiscal year 2015. Following the closure of the deal, Mallinckrodt shareholders will own about 50.5 percent and former Questcor shareholders will own nearly 49.5 percent of the combined company's stock.

".....our results were in line with the seasonal patterns we typically see. Purportedly, incidence of multiple sclerosis (MS) exacerbations can be lower during the winter months. In addition, annual January insurance plan reenrollment activities tend to temporarily slow down the prescription reimbursement process for some specialty drugs during the first calendar quarter," President and CEO Don Bailey said in a statement.

The Anaheimm, California-based company reported net income of $74 million or $1.20 per share for the first quarter, higher than $39.06 million or $0.65 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter totaled $86.36 million or $1.40 per share, compared to $45.83 million or $0.76 per share in the year-ago quarter.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $1.61 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter surged 68 percent to $227 million from $135.13 million in the same quarter last year, but missed seven Wall Street analysts' consensus estimate of $239.81 million.

BioVectra contributed $17.3 million to total sales, doubling from $8.4 million last year.

The sales growth was primarily driven by the expanded usage of H.P. Acthar Gel in multiple therapeutic areas, primarily by rheumatologists prescribing Acthar for patients suffering from dermatomyositis, polymyositis, rheumatoid arthritis, and systemic lupus erythematosus. The product label for Acthar includes 19 FDA-approved indications.

The company noted that Acthar prescription activity was relatively soft in January and February but picked up significantly during March and April.

Questcor shipped 7,080 vials of Acthar during the quarter, up 47 percent from 4,830 vials last year. The company added that vial shipments are subject to significant variation due to the size and timing of individual orders received from its distributor.

Total new paid prescriptions for Acthar for the quarter increased about 35 percent to about 2,325 to 2,350 from last year.

The company noted that it believes that insurance coverage for Acthar continues to remain favorable, when Acthar is prescribed for patients in need of an FDA-approved treatment alternative.

QCOR closed Monday's regular trading session at $79.05, down $2.45 or 3.01% on a volume of 4.0 million shares. The stock lost a further $1.59 or 2.01% in after-hours trading.